Entrepreneur Neha Kumar calls the period between 2012 and 2018 the DTC wine market’s “frothy era,” when private capital flooded into startups so quickly that founders faced increasing pressure to scale, sometimes at the expense of what they did best.
“A lot of the companies kind of had to pivot or steer away from what we would consider their core competencies,” Kumar told Retail Brew. “Because for anyone to make any money, the company [had] to hit a very large scale.”
One such startup was Winc, a subscription wine service that launched in 2012 and raised millions of dollars in venture capital before going public in 2021, only to declare Chapter 11 bankruptcy in 2022 without ever turning a profit.
This might have been the end of the story if not for Full Glass Wine. Co-founded by Kumar and Louis Amoroso, formerly of Drinks.com, the brand management and acquisition firm purchased the company last year because it saw promise in its underlying business model, according to Kumar.
But this was just the beginning of Full Glass Wine’s acquisition spree. It’s since purchased two other struggling DTC wine companies, Wine Insiders and Bright Cellars, and is keeping an eye out for other potential deals. According to Kumar, the market is ripe for this kind of consolidation, and Full Glass Wine is leading the charge with the aim of becoming a major player in the space.
“For us, it truly is a very opportunistic situation,” she said.
Good material: But Full Glass Wine isn’t just buying up failing startups willy nilly. In picking candidates for acquisitions, Kumar said the goal is to find companies with a “strong connection with the consumers” and “some very good core material in them.”
What constitutes good “material?” That depends on the company. With its latest acquisition, Bright Cellars, which was just announced last week, Kumar said it was a proprietary algorithm for matching wines with consumer preferences. With Winc, it was a top-notch discovery platform designed to help customers find and learn about different wine varietals.
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One common element of all three firms, she said, is their appeal to “aspiring wine drinkers.”
“They’re not people coming in usually for an $80 to $100-plus bottle of wine,” she added. “But they’re truly customers coming in who want to learn more and who want to get a little bit more of an understanding, and they want a little bit more hand-holding.”
Glass half full: Kumar’s optimism contrasts with another narrative that DTC wine is up against serious regulatory and public relations hurdles. The Wine & Spirits Wholesalers of America, for instance, recently warned that “lawmakers and regulators are sounding the alarm about the dangers of direct-to-consumer (DTC) alcohol shipping” and that “states have lost millions in tax revenue, underage consumers have gained greater access to alcoholic products, and the risk of adulterated products entering the marketplace has skyrocketed.”
Kumar said she expects more enforcement going forward, but said this looming challenge actually supports the case for greater consolidation. She cited the example of how labels for new wine varieties need to be approved in every state where they ship. In a consolidated company, this kind of work can be assigned to specialized employees.
“I’m very excited about it because we have an engine, and so we don’t need to have one person wearing 10 different hats,” she said.
She added that the improved technological capabilities of a combined firm would also help prevent individual customers ordering more wine than is legally allowed. Wine Insiders, for example, has a proprietary technology designed to closely track orders. Now that it’s a part of Full Glass Wine, that tech is available to all three companies.